Weekend Wars: Facebook vs. Groupon

With all of the hubbub about Facebook and Mark Zuckerberg these days, I want to remind you guys that they are not the only game in town.

In fact, there's another hottie at the dance who may not win homecoming queen, but could turn out to be better marriage material down the road.

Now that I have the attention of the feminazis and Facebook groupies, I crack open my umbrella and await the rainfall of hate and ridicule.

Groupon > Facebook...by a Country (wide) Mile

As most of you guys guffaw over Goldman's bucket shop production with Facebook as the lead, I am not impressed.

As Goldman does battle with Stanley over the coveted Groupon IPO,however, I am all eyes and ears.

This is the hot ticket in town, kids.

It's no secret that I am not a Facebook fan, not only due to the fact that I feel it is creating an even more socially retarded generation than the currently vegetative one. I am highly skeptical of Facebook's ability to monetize on all those hundreds of millions of users to the extent that the great hype machine would have us believe.

Groupon, on the other hand is a real deal old time, brick and mortar business. A cash cow, with a focused yet expansive niche.

Where Facebook is the silicone enhanced, makeup laden 10 with a fetish for cocaine, cowboys and the liquid diet.

Groupon's the solid 8 with great genetics, an angel's attitude, cooks, cleans, raises the kids, makes her own cash and has her head on straight.

Yeah...I just went there.

Groupon's recent rebuff of Google's $6 billion dollar takeover offer have sent (reasonable) IPO spec figures into the $15 billion range.

Though that is far beneath the (unreasonable) $50 billion Facebook valuation of a few weeks back, Groupon can actually back its valuation with a sea of revenue streams and (most importantly) a specific proven scalable business model.

I am going on the record. I like Groupon better than Facebook, as an investment vehicle.

In fact, I don't think Facebook is even in Groupon's league from the individual investor's perspective as far as returns go.

Of all the IPOs in recent memory, I think Groupon has the potential to be the greatest value play.

Facebook's not even in its league.

Let the hate...I mean debate begin!

Comments (55)

Jan 16, 2011

This.

when you're accustomed to privilege, equality feels like oppression

Jan 16, 2011

I couldnt agree more, I just dont have the vision that others do for monetization possibilities with facebook.

On the other hand though, do you not think the Groupon buisness model is easily replicable? or is the first mover advantage that large?

Jan 16, 2011

There are tons of Groupon imitators already in the market, and I think that they've proven the first mover has already succeeded.

when you're accustomed to privilege, equality feels like oppression

Jan 16, 2011

I hate Facebook.
Groupon kind of mystifies me a little. They offer such insane deals that I don't understand how they make money. I've seen gift cards half off, 70+% off things etc. I don't know who takes the financial brunt of those discounts, but it seems like businesses would have a tough time making money. Obviously they're making it work somehow, but it's pretty interesting to me.
That said, I do have a friend who knew someone whose store had a Groupon once..apparently the store was more crowded the next day than ever before

Jan 16, 2011
ibintx:

I hate Facebook.
Groupon kind of mystifies me a little. They offer such insane deals that I don't understand how they make money. I've seen gift cards half off, 70+% off things etc. I don't know who takes the financial brunt of those discounts, but it seems like businesses would have a tough time making money. Obviously they're making it work somehow, but it's pretty interesting to me.
That said, I do have a friend who knew someone whose store had a Groupon once..apparently the store was more crowded the next day than ever before

The stores take the massive financial brunt; on top of the discounts, Groupon even takes a cut. The thing is that Groupon drives insane traffic to businesses that people never knew about before.

Jan 16, 2011

Interesting...

Of course when I say that I don't understand all of the hype w facebook, I get shit thrown at me... even if it is just that, I don't UNDERSTAND it

If your dreams don't scare you, then they are not big enough.

"There are two types of people in this world: People who say they pee in the shower, and dirty fucking liars."-Louis C.K.

Jan 16, 2011

I was totally hooked on GroupOn when I was living in the US.. its definitely more addictive than Facebook. And companies are willing to take the steep discounts because it drives so much volume and awareness about the business. Although I did read somewhere that around 40% of companies surveyed mentioned they wouldn't use GroupOn a second time because they do incur quite a hefty loss and most customers dont seem to come back. I'm equally at a loss as to how Facebook can be valued as highly as it seems to be right now. But facebook definitely seems to have a grip over the souls of pretty much every urban teenager / college kid in the world.

Jan 16, 2011

I have quite a few friends working there and have seen the revenue model. Usually Groupon will split the proceeds 50/50 with the retailer. So a $25 Groupon that offers $50 of food to a restaurant only nets the restaurant $12.50. Not surprising that a lot of retailers dont re-up.

You talk about some easy money out of colllege; quite a few of my friends are already in the six figures as city sales reps for Groupon and they all work 9-6.

when you're accustomed to privilege, equality feels like oppression

Jan 16, 2011
onemanwolfpack:

I have quite a few friends working there and have seen the revenue model. Usually Groupon will split the proceeds 50/50 with the retailer. So a $25 Groupon that offers $50 of food to a restaurant only nets the restaurant $12.50. Not surprising that a lot of retailers dont re-up.

See I really don't see this as a sustainable model. That's ridiculous for a company to sell gift cards for only a quarter of their value. If businesses are losing money and don't think customers will return, then they're not gonna do another Groupon (like someone else mentioned). Eventually it seems like they're gonna run out of businesses that want to do it.

Jan 16, 2011

Groupon isn't sustainable, yet. I read an analysis somewhere on WSJ where the business using Groupon's service can get a higher value from Groupon's advertising than from traditional advertising, but these certain instances are not common. In fact, most of the time, the business loses a ton of net cash despite all the volume it received through Groupon. Currently, I would say that most of the utility is captured on the user/Groupon side rather than the businesses side, yet to make Groupon sustainable, more of the utility has to go toward businesses. Until that happens, I'm more bullish on Facebook than Groupon.

One of the biggest markets is the teen demographic, and Facebook has total control over it. Without Facebook, a huge company like Zynga couldn't exist, which shows me the potential for revenue creation that Facebook has.

Jan 16, 2011

Midas how do you not see the value, not to mention the potential, of Facebook?

Jan 16, 2011
Babyj18777:

Midas how do you not see the value, not to mention the potential, of Facebook?

If you do then make your case

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 16, 2011
happypantsmcgee:
Babyj18777:

Midas how do you not see the value, not to mention the potential, of Facebook?

If you do then make your case

Starting with ads, for every minute longer a user stays on Facebook, Facebook has the ability to charge its advertisers more. For every new user joining Facebook, Facebook has the ability to charge its advertisers more. By tacking on more and more applications (Games, Mail, etc), Facebook is able to drain more internet time that the user would've spent on some other website (addictinggames, Gmail, etc), thus generate more ad revenue.

On the other hand, Facebook can leverage these same applications to charge the business-end for using its service. For example, the Facebook Games platform has a tight partnership with Zynga. As long as Zynga's generating revenue, Facebook can take a slight margin off the top in addition to the ad revenue it's gaining. This, in my opinion, is no different from what Google did in the past, apart from the fact that it's on different platforms (social network vs. search engine). The difference between Facebook and Groupon, however, is sustainability and scalability. As the current generation gets older, Facebook remains valuable to them (via connecting with old friends, etc), and every generation after that will still see value in Facebook just as the current generation does today. However, it will cost substantially less for Facebook to hoard these new users because the platform is already in place. For Groupon, it'll continue to require more businesses to try the service and keep them on board.

Jan 16, 2011

I think we're beating a dead horse at this point but most people think the valuation is a bit ridiculous for a lot of reasons. FB market share isn't going to be increasing to any great degree at any point in the next 10+ years (particularly in light of the fact that China has it's own, independent version of FB already so that market is pretty much a separate entity). 400mm in profits this year so you figure out the multiplier used for the valuation (hint its large). There are certainly ways to monetize the platform but the question is how will these be implemented in such a way that they don't reduce the number of users while still adding to profit (think of stuff like charging a users fee etc,).

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 16, 2011

I think both are great businesses. Facebook is much more than just ad revenue. Groupon looks really cool also. If anything Groupon illustrates the insane markups companies have.

I just signed up for Groupon and Open Table.

Jan 16, 2011

Step 1. Facebook acquires Groupon
Step 2. ????
Step 3. Profit

Just think of the possibilities. The synergies would be huge if facebook found a way to integrate groupon to the fb engine. From a technical point of view, it wouldn't be that difficult to implement and makes a lot of sense ...

Jan 16, 2011
Omoba De Jonz O:

Step 1. Facebook acquires Groupon
Step 2. ????
Step 3. Profit

Just think of the possibilities. The synergies would be huge if facebook found a way to integrate groupon to the fb engine. From a technical point of view, it wouldn't be that difficult to implement and makes a lot of sense ...

Facebook could even skip the acquisition of Groupon and simply start their own coupon arm... Run the Groupies right out of business.

Jan 16, 2011

If I remember correctly from a segment on some show, Google tried buying Groupon but the founder denied them...

This could've been a different company but I think it was this one

If your dreams don't scare you, then they are not big enough.

"There are two types of people in this world: People who say they pee in the shower, and dirty fucking liars."-Louis C.K.

Jan 17, 2011

hmmmm, facebook is probably undervalued, as it is stomping out all other sites doing the same thing. The only way to compete is to carve out a niche, but it has the same psychological signifigance of a lottery that hits a high number: even MORE people flock to it. Plus, it's very user friendly, which most other platforms were not - I'm having relatives well into their 50's and 60's jumping on b/c it's easy to use, so I don't think they're anywhere near market saturation. PLUS - China is a large market for sure and the zucker is courting China now, but even if no one there participates, facebook doesn't even need them.

Another thing that makes him stand out is the fact that facebook is so high profile it makes Zuckerberg a political asset (if he's already not connected) so there's probably no limit to the interplay between his platform (or versions of it) and the gov't. I put facebook in the same category of importance as the developement of the TV or telephone, and he's probably going to be able to generate revenue at some point by providing modified versions of his operating system to corporate, military, and state agencies (they will have the contacts built in, but compare his o/s to any state system, there's just no comparison as far as utility goes); licencing alone could make him more billions if he goes down that path. (big IF)

Comparing it to groupon (which seems to have quite a bit of viable competition) is a bit apples to oranges. Both are good businesses generating money, but I think facebook will continue to hog the limelight for the foreseeable future.

There is one BIG contrast between the general gist of the two: facebook has yet to even really TRY to make more money, and groupon is already redlining their ability to generate money, and a LOT of times even hurts the businesses they work with thereby burning bridges and keeping others from getting too close. If I had $10 dollars to invest, I'd put 2 on groupon and the other 8 on facebook. The companies backing both (GS, SKY, and several others) will eventually push for facebook to cannibilize the groupon type of model anyway....

Jan 17, 2011

One other thing about facebook - it is a much more efficient networking tool than any other site, LinkedIn included. Were that capacity alone to be monetized, I would venture to guess that facebook would move from the category of 'business' to 'infrastructure' in a few short years.

Just my perception......

Jan 16, 2011
UFOinsider:

One other thing about facebook - it is a much more efficient networking tool than any other site, LinkedIn included. Were that capacity alone to be monetized, I would venture to guess that facebook would move from the category of 'business' to 'infrastructure' in a few short years.

Just my perception......

I would argue that networking capabilities of facebook are not one of the core reasons people sign up/use it. I also dont think facebook is that great of a tool, it merely allows me to stay connected to people Im probably not going to talk to much anyway. I mean yes its useful, but I wouldnt put it alongside one of the great inventions.

I also still don't see some huge monetization strategy outside of advertising.

Jan 17, 2011

The value of Groupon to businesses is it brings in potential new customers that may have never heard of it. They do take a loss by offering amazing deals but if they're able to convert just a few new customers into returning customers then the loss will eventually pay for itself. It's basically a one time advertising cost. It's often not worth doing Groupon a second time because the belief that word of mouth will help spread the reputation of their business. Facebook just has so many future revenue possibilities but how many of these will actually be realized?

Jan 17, 2011

What are your thoughts on fb using the linkedin system of paid premium accounts where you get way more kickass features. If they charge, say, 5 dollars per month per user for a premium acct. I'm sure they could at least convert 10 percent of their users. Which is an extra 3 billion in revenue, and doesnt add anything to costs, other than an AR department.

Jan 16, 2011
everythingsucks:

What are your thoughts on fb using the linkedin system of paid premium accounts where you get way more kickass features. If they charge, say, 5 dollars per month per user for a premium acct. I'm sure they could at least convert 10 percent of their users. Which is an extra 3 billion in revenue, and doesnt add anything to costs, other than an AR department.

I don't hate the idea but what 'premium features' would users be able to access? In other words, would you reduce the amount of content currently available for free and make some of that formerly free stuff paid or would you add content and make users pay for the additional stuff? I can see option 1 having a much more detrimental effect than option 2.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:
everythingsucks:

What are your thoughts on fb using the linkedin system of paid premium accounts where you get way more kickass features. If they charge, say, 5 dollars per month per user for a premium acct. I'm sure they could at least convert 10 percent of their users. Which is an extra 3 billion in revenue, and doesnt add anything to costs, other than an AR department.

I don't hate the idea but what 'premium features' would users be able to access? In other words, would you reduce the amount of content currently available for free and make some of that formerly free stuff paid or would you add content and make users pay for the additional stuff? I can see option 1 having a much more detrimental effect than option 2.

Well, I was thinking along the lines of having different tiers of the same service for everyone, rather than taking services away completely. For example, in the free account, you could be limited to...250 friends, 10 photo albums, 1 event per month, 5 group memberships, 50 character limit in status updates etc etc... where in the premium account (which would still be dirt cheap, not like linkedin) everything is unlimited.

Forget 5 bux a month even, say they decide to charge 20$ up front for the entire year. I have a feeling that at least 50% of people would pay it. I think at this point, everyone is so addicted to facebook that they would easily pay 20$ a year to get their fix. Now suppose 250 million users pay 20$ a year to use the platform. That's 5 billion dollars in revenue, and it adds probably no more than 10 million dollars to their costs per year (very generously assuming they would hire 150 people at an average salary of 66K to run their AR department). Plus they can still monetize the ad revenue aspect better. FB in my books has the potential to make 10 billion a year in revenue, and clear at least 40% of it in EBIDTA. At a pretty healthy P/E of 25, it can definitely turn into a 100 billion dollar company if they play their cards right.

Jan 17, 2011
everythingsucks:

Forget 5 bux a month even, say they decide to charge 20$ up front for the entire year. I have a feeling that at least 50% of people would pay it. I think at this point, everyone is so addicted to facebook that they would easily pay 20$ a year to get their fix. Now suppose 250 million users pay 20$ a year to use the platform. That's 5 billion dollars in revenue, and it adds probably no more than 10 million dollars to their costs per year (very generously assuming they would hire 150 people at an average salary of 66K to run their AR department). Plus they can still monetize the ad revenue aspect better. FB in my books has the potential to make 10 billion a year in revenue, and clear at least 40% of it in EBIDTA. At a pretty healthy P/E of 25, it can definitely turn into a 100 billion dollar company if they play their cards right.

No chance that they would get 50% of the users switching over to a pay system. Of the 500 million users now I bet a pretty decent percent live in developing countries, say 15%, where their opt-in rate would be about 0%. Now you are at 425 million users. I'm sure older users would not pay either because they don't have tons of friends nor photos, so assuming they make up 15% of facebook as well you take out another 75 million and you are at 350 million. Of those 350 million how many actually use facebook enough to even need to pay the fee probably less than half, but lets say half. So we are at 175 million. From there I'd bet only about 25% at most would pay or about 43 million. While that isn't a small number it isn't breaking the bank and probably not worth the headache of pissing off the entire user base.

Think about it, with the continuous fall of server prices launching a new social network that was free wouldn't be all that difficult, given that people would be over facebook trying to charge them. There would probably be a simple tool that let you port all your current facebook friend also.

Charging users isn't the option.

Jan 17, 2011
ke18sb:
everythingsucks:

Forget 5 bux a month even, say they decide to charge 20$ up front for the entire year. I have a feeling that at least 50% of people would pay it. I think at this point, everyone is so addicted to facebook that they would easily pay 20$ a year to get their fix. Now suppose 250 million users pay 20$ a year to use the platform. That's 5 billion dollars in revenue, and it adds probably no more than 10 million dollars to their costs per year (very generously assuming they would hire 150 people at an average salary of 66K to run their AR department). Plus they can still monetize the ad revenue aspect better. FB in my books has the potential to make 10 billion a year in revenue, and clear at least 40% of it in EBIDTA. At a pretty healthy P/E of 25, it can definitely turn into a 100 billion dollar company if they play their cards right.

No chance that they would get 50% of the users switching over to a pay system. Of the 500 million users now I bet a pretty decent percent live in developing countries, say 15%, where their opt-in rate would be about 0%. Now you are at 425 million users. I'm sure older users would not pay either because they don't have tons of friends nor photos, so assuming they make up 15% of facebook as well you take out another 75 million and you are at 350 million. Of those 350 million how many actually use facebook enough to even need to pay the fee probably less than half, but lets say half. So we are at 175 million. From there I'd bet only about 25% at most would pay or about 43 million. While that isn't a small number it isn't breaking the bank and probably not worth the headache of pissing off the entire user base.

Think about it, with the continuous fall of server prices launching a new social network that was free wouldn't be all that difficult, given that people would be over facebook trying to charge them. There would probably be a simple tool that let you port all your current facebook friend also.

Charging users isn't the option.

You bring up some good points, but I think you are severely underestimating the powers of inertia and 'peer pressure', First of all, no matter how cheap servers become, I don't think a new social network that tries to compete with facebook would have any success. People are not going to be willing to abandom something they are so used to and spend so much time on over a few dollars per year. Also, the power of facebook is that everyone is on it. If I'm unwilling to pay the 20 dollars but the rest of my friends are, there will be no point in going to the new social network because no one else will be there to connect with.

Now if some kid has the premium account, and fb can make it so that everyone can distinguish between a premium profile and a regular unpaid one, then every kid will want to have the premium one if even one of their friends has it. Since so many of the 500 million users are kids (loose definition of the word), they will easily be able to convert this demographic to premium accounts.

I think your best point was that people can just adapt so that they stay within the limits of the free version. Though I think a significant percent of people will do this, many won't. It's similar to the 72 minute limit for megavideo. It's annoying, and the alternative is so cheap that even if you disagree with the premise, you will just pay to get around it.

You're right, 50% may be a bit ambitious, but definitely 25% is more than attainable.

Jan 17, 2011
everythingsucks:

What are your thoughts on fb using the linkedin system of paid premium accounts where you get way more kickass features. If they charge, say, 5 dollars per month per user for a premium acct. I'm sure they could at least convert 10 percent of their users. Which is an extra 3 billion in revenue, and doesnt add anything to costs, other than an AR department.

They probably won't. The idea has been floated before, but once a site goes down that road they pretty much kill off about half of their business...

Jan 17, 2011

Groupon on the other hand is definitely not a sustainable business model in my opinion. I know a few people who started a Groupon competitor about a year ago, and they have all told me that getting repeat sales at the same vendor is quite difficult. These people are generally receiving anywhere from 5% to 25% of their list price, and they aren't happy about it, because the customers are not going back. They either wait for another groupon for the same place, or they wait for a groupon from a competing business.

Jan 16, 2011

Problem with your revenue model is that it doesn't align with company culture. The Zuck would never agree to make users pay for the fundamental service, especially service that was previously free. As long as he's the CEO of Facebook, I don't think that type of revenue generation will ever be implemented.

Jan 17, 2011
HarvardOrBust:

Problem with your revenue model is that it doesn't align with company culture. The Zuck would never agree to make users pay for the fundamental service, especially service that was previously free. As long as he's the CEO of Facebook, I don't think that type of revenue generation will ever be implemented.

I agree with you, and that's a big reason why I think that Zuckerberg is a sh!tty manager. He's a brilliant inventor, and should resign himself to the CTO position and let an experienced person take the CEO spot, the way Page and Brin did with Google. There is so much money making potential in FB, and it's a shame it is going to waste.

Jan 16, 2011
everythingsucks:
HarvardOrBust:

Problem with your revenue model is that it doesn't align with company culture. The Zuck would never agree to make users pay for the fundamental service, especially service that was previously free. As long as he's the CEO of Facebook, I don't think that type of revenue generation will ever be implemented.

I agree with you, and that's a big reason why I think that Zuckerberg is a sh!tty manager. He's a brilliant inventor, and should resign himself to the CTO position and let an experienced person take the CEO spot, the way Page and Brin did with Google. There is so much money making potential in FB, and it's a shame it is going to waste.

But I think Zuck's attitude is what makes it so popular. By that I mean the fact that it is so successful is probably LARGELY based on the fact that it is free and there is little to no pressure to buy anything as the ads are very minimally invasive. (Disclaimer: I haven't had a facebook in like 6 months so all of this could be wrong by now but thats how I remember it).

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:
everythingsucks:
HarvardOrBust:

Problem with your revenue model is that it doesn't align with company culture. The Zuck would never agree to make users pay for the fundamental service, especially service that was previously free. As long as he's the CEO of Facebook, I don't think that type of revenue generation will ever be implemented.

I agree with you, and that's a big reason why I think that Zuckerberg is a sh!tty manager. He's a brilliant inventor, and should resign himself to the CTO position and let an experienced person take the CEO spot, the way Page and Brin did with Google. There is so much money making potential in FB, and it's a shame it is going to waste.

But I think Zuck's attitude is what makes it so popular. By that I mean the fact that it is so successful is probably LARGELY based on the fact that it is free and there is little to no pressure to buy anything as the ads are very minimally invasive. (Disclaimer: I haven't had a facebook in like 6 months so all of this could be wrong by now but thats how I remember it).

Zucks attitude MADE it popular. Now FB is so popular, that it doesn't matter what Zuck thinks anymore. Bin Laden could become the new CEO of facebook and people would still use it just as much.

Jan 17, 2011

double post

Jan 17, 2011
HarvardOrBust:

Problem with your revenue model is that it doesn't align with company culture. The Zuck would never agree to make users pay for the fundamental service, especially service that was previously free. As long as he's the CEO of Facebook, I don't think that type of revenue generation will ever be implemented.

Agreed, and I don't forsee him giving up the CEO position any time soon. He's already rich beyond his wildest dreams, and now he's making facebook an extension of his own beliefs.......cool stuff

Jan 16, 2011

I kind of like where you are taking this thing everythingsucks. The only draw back would be the following: what about people that already have 400 albums and billion friends (we all know THAT person)? How would you handle the cost structure then? Would they be allowed to keep what they have or would they have to pay to maintain those levels? I also think, providing they were able to institute this idea, it could seriously improve/increase the amount of innovation as far as additional apps and features within the site. Developers employed by facebook would be motivated to create new types of content so that more people would be willing to pay for the service in order to use them (like the difference between paid and unpaid iPhone apps, you can get something similar for free in most cases but people are willing to pay XXX nominal fee to get a better product). I would also make it a one time payment versus a monthly/yearly type of thing then maybe incorporate paid additions along the way.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:

I kind of like where you are taking this thing everythingsucks. The only draw back would be the following: what about people that already have 400 albums and billion friends (we all know THAT person)? How would you handle the cost structure then? Would they be allowed to keep what they have or would they have to pay to maintain those levels? I also think, providing they were able to institute this idea, it could seriously improve/increase the amount of innovation as far as additional apps and features within the site. Developers employed by facebook would be motivated to create new types of content so that more people would be willing to pay for the service in order to use them (like the difference between paid and unpaid iPhone apps, you can get something similar for free in most cases but people are willing to pay XXX nominal fee to get a better product). I would also make it a one time payment versus a monthly/yearly type of thing then maybe incorporate paid additions along the way.

This is what I would offer THAT person. "You have 30 days to remove any content beyond the free allowance or we will randomly remove it. Otherwise, pays the 20 bux per year."

They won't like reading it, and they'll b!tch and moan, but they'll pay, and get over it in about 2 weeks. I paid the 200 bux for the lifetime unlimited megavideo account. I would definitely pay atleast 200 dollars for a lifetime unlimited fb account.

Jan 16, 2011

haha probably true. Or someone would try to come up with a free clone of FB to steal away the people that got all indignant about having to pay for something they use (imagine that).

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:

haha probably true. Or someone would try to come up with a free clone of FB to steal away the people that got all indignant about having to pay for something they use (imagine that).

I think they need to charge a lot less than what they can get away with. That's going to be the key. They probably need to figure out how much money they could get out of people before it would be worth it for them to rebuild their entire social network elsewhere, and then charge a small fraction of that. I honestly think people would be willing to pay at least 15 dollars a month for FB if they had to, so they wouldn't even think about paying 20 dollars for the whole year. They would complain, but ultimately they would realize that they've been enjoying a free ride, and it's time the company looks after itself a little.

Jan 16, 2011

I think you have to remember too that everyone in a household (normally) has their own, individual facebook. This fact, in conjunction with the fact that everyone can have a facebook now regardless of SES, would make that price point a bit high in my mind. Imagine a family with 3 kids and assume one parent has a FB. That's 60 bucks a month or 720 bucks a year that they weren't paying just a day before. Not that I'm disagreeing but it's something to think about.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:

I think you have to remember too that everyone in a household (normally) has their own, individual facebook. This fact, in conjunction with the fact that everyone can have a facebook now regardless of SES, would make that price point a bit high in my mind. Imagine a family with 3 kids and assume one parent has a FB. That's 60 bucks a month or 720 bucks a year that they weren't paying just a day before. Not that I'm disagreeing but it's something to think about.

Dude, 60 bux a year...not a month.

Jan 16, 2011
everythingsucks:
happypantsmcgee:

I think you have to remember too that everyone in a household (normally) has their own, individual facebook. This fact, in conjunction with the fact that everyone can have a facebook now regardless of SES, would make that price point a bit high in my mind. Imagine a family with 3 kids and assume one parent has a FB. That's 60 bucks a month or 720 bucks a year that they weren't paying just a day before. Not that I'm disagreeing but it's something to think about.

Dude, 60 bux a year...not a month.

Apparently I can't read...

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jan 17, 2011
happypantsmcgee:
everythingsucks:
happypantsmcgee:

I think you have to remember too that everyone in a household (normally) has their own, individual facebook. This fact, in conjunction with the fact that everyone can have a facebook now regardless of SES, would make that price point a bit high in my mind. Imagine a family with 3 kids and assume one parent has a FB. That's 60 bucks a month or 720 bucks a year that they weren't paying just a day before. Not that I'm disagreeing but it's something to think about.

Dude, 60 bux a year...not a month.

Apparently I can't read...

Haha it's all good. Happens to the best of us...

Jan 16, 2011

I think you guys need to step back a bit and look at the big picture. The question I want to pose is this: What makes Facebook right now worth it for me to pay any money? I can't have 300 pictures? Fine, I'll remove all of my old pictures until I reach the cap. Same goes for friends and whatever excess crap I can't have. The people who will pay for that kind of limitation would probably fit a Mini Cooper. Keeping pictures on your page isn't the same thing as downloading a 200 MB porno from Megavideo, and it'll take a more innovative type of model to be successful despite the unlimited potential Facebook has.

I would be more interested in Facebook selling market data to businesses... I think that could be a real money maker as long as it's legal.

Jan 17, 2011

The only reason FB needs to make money is to please investors and employees. Zuckerburg doesn't care about money. Else he would have sold the site in 2006. Or he would live in an actual house instead of renting a place he found on Craigslist. Or he would buy a new car instead of his aging Acura.

Fact is, so long as he is in control, the site isn't about money. That is why, despite the fact that I'm the Pamela Des Barres of facebook groupies, I'd say GroupOn is a better INVESTMENT. Facebook is a more useful site for us all and has long term staying power, but it isn't about the money right now, so why try and make it about something its not.

Jan 17, 2011

I think they could experiment with a "premium account" option that starts at ~$5 /month (and if people opt in at this level they never have to pay more than $5/month, even if the premium price level goes up in the future).

For that premium account, all of the ads are removed and that space is used to display some other interesting stats: x number of people visited your profile in the last x day, week, month, year....etc.

Eventually, if they add enough "cool features" to the premium account that you'd start to get a lot more users paying the $5/month. Even at 5% of the user base, that is real $s...and it shouldn't piss people off too much since everyone would still get the fb they know now for free (no obligation to upgrade).

Jan 17, 2011

Don't get any funny ideas for WSO Patrick.

Jan 17, 2011
ke18sb:

Don't get any funny ideas for WSO Patrick.

...ha, we already basically have this. "freemium" - sign up, chat, etc. for free, pay for professional resume reviews, interview guides, mock interviews, financial modeling training, etc...

Jan 18, 2011

Agree with others on the sustainability part for Groupon, especially given that other major players like Ebay running group buying deals in India & The Philippines and Yelp running their own too. I will not put Groupon in par with Facebook(even though I see fb fading away too with time as competition heats up and advertisers seek more specific targeted clientele social media sites). Let us wait on Andrew Mason and crew to see what they have instore in 2011.

Nay 2 Groupon.

Jan 18, 2011

Lots of ways FB can haul in some extra cash....

1) create a cheaper, larger network rival to GroupOn.
2) create a cheaper, larger network rival to LinkedIn.
3) create a cheaper, larger network, dating site - which can be made "safer" by requiring every profile to be "verified" for the basic data, name, age, etc, for a small fee ofcourse.
4) create a cheaper, larger network rival to Ad$ltfriendfinder! which can also be made "safer" and a bit more legit by requiring verification for a small fee.

I think with their large network of users they can get 10% of their customer base on 1 thru 3 and maybe 5% to 4 ... lol. Am thinking if they do these and a few others right they can make an extra 2-5 Billion extra easy - while attaining top-dog status in several niches.

See lots of way to make that cheddar .... no need to piss off the masses with tiers on the main functionalities.

Jan 18, 2011

just make advertisers pay more for adds /thread

Jan 18, 2011
Jan 17, 2011
Feb 11, 2011